Canadian Mortgage and Housing Corporation CEO Evan Siddall said in an op-ed in the Globe and Mail this week that for the first time ever, the federal agency will be issuing a “red” level warning for the entire Canadian housing market.
The announcement will come in CMHC’s quarterly Housing Market Assessment on Oct. 26.
According to CMHC, a “red” warning indicates evidence of problematic conditions in the housing market. To assess the risk, the agency looks at four things:
Overheating of demand, where sales outpace new listings
-Acceleration of house prices
-Overvaluation in house prices, where prices are not fully supported by income, mortgage rates and population
-Overbuilding
These factors have to be strong in order for a high-risk warning to be issued.
But according to TD economist Diana Petramala, home owners shouldn’t be too worried yet about a housing crash.
“It’s very odd to be coming out with a red reading now that the economy is doing well and market activity has slowed,” she said.
http://globalnews.ca/news/3018605/cmhc-to-issue-first-ever-red-warning-for-canadian-housing-market-what-that-means-for-you/
